The new record of inflation in the eurozone strengthens the argument for an increase in interest rates of the European Central Bank by 50 basis points (0.5%), said the central banker of Austria and member of the Board of the ECB Robert Holtzman.
In particular, in his statements to Bloomberg, Mr. Holtzman, who as the agency points out is known for his aggressive attitude and has in the past asked for a 50 bp increase, stressed that the absence of “decisive action” now involves risk of lowering consumer price expectations, later demanding tougher measures that would trigger a recession.
On the contrary, he said, “an increase of 50 basis points would send the necessary and clear message that the ECB is serious about fighting inflation.”
“A clear signal through interest rates would also help support the euro exchange rate. A weak euro does not help the inflation front,” he added.
According to the agency, the debate on ECB interest rates has shifted from when they should increase to the size of the increases needed to control inflation, which is now running at four times the official 2% target of the Bank.
Mr Holtzmann is not alone in the ECB’s 25-member board in favor of a higher-than-usual rate hike, but the bank’s chief economist Philip Lane on Monday backed President Lagarde’s 0.25 increase. %.
Source: Capital
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